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The Insolvency and Bankruptcy Board of India (IBBI), to get a better handle on the delays in completion of activities under the Corporate Insolvency Resolution Process (CIRP), has now introduced reporting mechanisms to address this issue.
Responsibilities has been cast on the interim resolution professional/ resolution professional (IRP/RP) to report within three days to IBBI their failure to complete specified activities under such a process. The activities for which reporting has been made mandatory include failure to make public announcement as per prescribed timelines and failure to complete CIRP within 180 days from the insolvency commencement date.
There is also now an obligation to report to the Board on continuing basis every 30 days till its completion. The said failure and continuing failures are required to be reported to the Board in Form CIRP-7.
Time management
From time to time, IBBI has been taking steps to ensure that CIRPs get completed in a time bound manner. The Insolvency and Bankruptcy Code requires a CIRP to be completed in 180 days.
Meanwhile, IBBI has amended Form C – which was required to be submitted by the financial creditors to the IRP/RP to stake their claims against the corporate debtors – to include the claims under the corporate guarantees issued by the corporate debtors. Also, an obligation has been cast on the financial creditors to report to IRP/RP satisfaction of such claims, whether in full or in part, from any source.
MP Srivignesh, Counsel, AnantLaw, said that the move mandating reporting of failure to adhere to timeline is aimed at pressurising the IRP or RP to meet the deadlines.
Jay Parikh, Partner, L&L Partners, said the latest IBBI move codifies the position of the NCLAT in Vishnu Kumar Agarwal Vs Piramal Enterprises Ltd. It now provides for the financial creditor to disclose in detail the nature of debt (whether as guarantor or as a principle debtor). “Further, it seeks to provide the tribunal better monitoring of the CIRP process by introducing timelines and reporting mechanics for delays. This will only improve transparency,” Jay said.
Raj Bhalla, Partner, MV Kini & Co said, “IBBI has said that the creditor has liberty to update his claim during the CIRP, thereby preventing unnecessary litigation by the creditor regarding his claim.”
Further, the IBBI has introduced a new form namely ‘CIRP-7’, if the activity mentioned in the regulation is not completed within the specified timelines. This form would have to be filed within 3 days from the specified date and continued to be filed in every 30 days. “By inserting this regulation, the IBBI wants to take an update on delay process in CIRP”, Bhalla added.
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